Po·Go Eyewear
Business Plan
Executive Summary The time is excellent to introduce non-prescription eyewear as a fashion accessory. In a recent study 46% of Americans said that they would wear glasses as an accessory. No longer are glasses associated with being “geeky.” Consumers want to look more intelligent for an interview, more playful for an outing, or more glamorous for an evening on the town. All of these looks can easily and affordably be accomplished with Pogo’s non-prescription eyewear. There is no easier way to alter your appearance than to put on a pair of glasses. Americans are aware of this fact, but up until now there have been few nonprescription choices. The only option is to visit your local optometrist and sort through hundreds of frames. Then you have to battle the pushy salespeople and pay prices often exceeding $200. Finally, you must wait for your order to be processed which can take up to a month. At Pogo we want to change all of that. We want to allow consumers to make an easy stop at our website where they can view free video tutorials regarding fashion and how to select frame designs and colors based on their own physical features. Our glasses will be sold affordable at less than $30 and will include a stylish carrying case and will be shipped the same day. Our selection will be limited to 20 to 40 of the most current and fashionable styles which will ease the decision making process for consumers. Our glasses represent a great gift giving opportunity, and are priced to allow consumers to own 2, 3, or 4 pairs. All of this will be supported by 1-800 customer service and a 30 day money back
Financial Highlights We expect to reach over $380,000 in sales in the first year and around 1.7 million in the second year. Operations should be profitable within the first few months of start up. In year two we forecast operating income to exceed $430,000. Year 1 Financial Forecast
$90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 Operating Income Gross Revenue
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I. General Business Description Pogo Eyewear will be in the business of retailing non-prescription optical grade eyewear to consumers throughout the world. Our mission is to provide quality stylish eyewear to those consumers who desire to augment their appearance with glasses but do not need prescription lenses. Initially we will market our products exclusively online through our website. In the future we plan to expand distribution to independent accessory shops and select national chains. Our products are designed to be a fashion accessory rather than a medical device and will be priced to retail between $10 and $30. According to a recent study conducted by Essilor of America1 46% of Americans would consider wearing eyeglasses as an accessory even if they didn’t need them. Our goal is to provide this market with an easily accessible and affordable product. Because this market is relatively undeveloped there is little evidence to support initial annual sales volumes. So far there has been no concerted attempt that we know of to market glasses solely as an accessory. At Pogo our business philosophy will be to sell fun. We want to breakaway our product from the traditional classification as a medical device and brand it in our customer’s minds as a hip and fashionable accessory. Our products will be designed and priced so that customers can affordably own a variety of styles and colors of frames to compliment their wardrobe. Our target market will initially be limited to women, but may be extended to include men in the future as demand warrants. Customers will include individuals
II. Products Our frame offerings will fall under three different categories: Intelligence, Fun, and Glamour. Each category will contain five to ten different frame designs and each frame will be offered in a variety of different colors and finishes. Frames will be of high quality that consumers would expect to receive from a traditional optometrist. We will offer a variety of both metal and acetate (plastic) frames which will all come preinstalled with clear polycarbonate lenses. In addition to the three frame categories listed above we will offer a “customizable” frame package that will include a basic plastic frame with a package of adornments such as jewels and crystals. Consumers will have the ability to create their own customized designs by affixing the jewels to the basic frame. This will make a great gift idea. The average optometrist’s office carries over 1,500 frames. Many of these countless frames are very similar in style and features. At Pogo we will focus on less than 50 of the most popular designs in order to make the frame selection process more fun and less stressful. Each frame will carry an unconditional money back guarantee and will be offered in small, medium, and large sizes. If customers are unsatisfied with their glasses they will have the option returning them for a full refund or exchange. Since our products are optical grade our customers will be able to have them adjusted at their local optometrist if needed.
III. Marketing Plan Product Men and women alike are constantly looking for ways to make themselves look and feel better. Whether it’s working out at the gym, buying a new dress, or having a makeover there is no doubt that our generation places a high value on appearance. Whether or not you wear glasses plays a large role in ones appearance. In the past glasses were often associated with being overly brainy. Now though glasses have evolved into a fashion statement for those who need them. What about those who don’t? Based on our research there is a growing interest in using non-prescription glasses to alter your appearance. After all, what faster and easier way is there to alter your appearance than to put on a pair of glasses? In a recent study conducted by Essilor of America it was revealed that 46% of Americans representing over 130 million people would wear non-prescription eyeglasses as an accessory. Despite the clear demand for this product there are few if any (see bleudame.com) companies who are focusing on this market. These consumers could easily visit their local optometrist and purchase a pair of frames with non-prescription lenses, but choose not to for a variety of reasons. This is because the optometrists are not selling the right product, in the right place, with proper promotion and sales techniques. At Pogo Eyewear our plan is to make non-prescription glasses available to everyone with catchy advertising, hip styles, and ease of purchasing. Pogo will breakaway from the established norms of the current eyewear market and establish something that is altogether new, fresh, and appealing to consumers.
Customers There is a demand throughout many demographic groups for non-prescription eyewear that is worn for fashion at a reasonable price. Interest is highest among a few select groups who place high importance on fashion and appearance. Because of this fact we feel it is prudent to begin by targeting these consumers before expanding our reach to less receptive demographics. To begin with we will target females aged 16 to 40. Because our product will be sold through pogoeyes.com it will be available to anyone in the world, but we will be specifically targeting US residents. According to the Census Bureau there are approximately 51 million females aged 15 to 40 in the United States. We will not segregate our customers based on income or education levels because people rich and poor, educated or not have a desire to “look good.” In addition we have adopted a pricing strategy that makes our product affordable to all but the most impoverished families which should make economic status generally a non-issue. For the same reasons we will not segment our market based on marital status. In the future we may expand our target demographic to include men as well as older women. It should be noted that the purchasers of our product will not always be the end consumer. One of our strategies will be to position Pogo Eyewear as a very “giftable” product. As such we will develop marketing strategies to target gift givers such as children, coworkers, and spouses.
Promotional Strategy The single most important aspect of Pogo Eyewear will be our promotional strategy. Our strategy is founded based on “Breakaway” positioning. The idea is to breakaway non-prescription glasses from their current association with medical devices and to reclassify them as a fashion accessory. The essence of this strategy is based on building a very strong brand that consumers will associate exclusively with the non-prescription eyewear industry. The Harvard Business Review (HBR) cites many notable success stories of Breakaway Positioning3 including: The Simpsons, Swatch, and EZ-Squirt Ketchup. Here are three outstanding examples of a business taking a product that was stagnant (cartoons, watches, and ketchup) and returning in to a period of growth by redefining it in consumers minds (cartoons for adults, watches for fun, craft food). According to HBR, after implementing a Breakaway strategy consumers no longer “see the breakaway product as simply an alternative to others in its category, consumers will perceive it as altogether different.” In order to accomplish the breakaway strategy you must alter the marketing mix as a way to distance the product from its old class and associate it with a new one in consumer’s minds. There are many tools that can be used in order to execute a Breakaway strategy. Our plan will be focused around three main areas: brand building and protection, viral marketing, and providing value to our customers by offering tips, tutorials, and other fashion and beauty information. Brand Building and Protection One of our first tasks is to develop the logo and packaging that will be associated with Pogo Eyewear products, materials, and web content. Once we have the
will be of value to them in regards to fashion and beauty in general. Our information will emphasize how adding glasses to your wardrobe can dramatically improve your appearance. Glasses can add sophistication, playfulness, or glamour to your look. Our website will also have specific video tutorials that cover topics related to eyeglass selection. We will have tutorials to cover topics such as face shapes, eyeglass materials, and eyeglass colors. Consumers will have the opportunity to learn how our various products may suit their specific features. Pricing Part of our Breakaway strategy is to differentiate the Pogo product based on price. Traditionally if you wanted to purchase a set of non-prescription eyeglasses you would visit an optometrist and place an order for prescription frames with non-prescription lenses. These frames are generally priced from $100 to $300 per pair with notion that most customers will be billing their insurance. This pricing strategy is not conducive to owning eyeglasses as a fashion accessory for the majority of people. Few people can afford to spend hundreds or thousands of dollars on eyeglasses as a fashion accessory. Our plan is to make non-prescription glasses available to middle and lower income individuals. Our products will be priced to retail between $10 and $30 a pair which will include a high quality case. At this price we hope to allow our customers to add 2, 3, or 4 pairs of Pogos to their wardrobes. Distribution Channels Another way for Pogo Eyewear to differentiate its products is with distribution. Traditionally non-prescription glasses have been distributed alongside
the future we also may explore distribution with national chains that exemplify our dedication to affordable fashion. Sales Forecast Low
Plan Quantity $$$ Quantity 1 100 $2,049 200 2 500 $10,245 1000 3 550 $11,270 1100 4 550 $11,270 1100 5 650 $13,319 1300 6 750 $15,368 1500 7 11 1125 $23,051 15 1500 8 11 1125 $23,051 15 1500 9 11 1125 $23,051 15 1500 10 11 1125 $23,051 15 1500 11 18 1875 $38,419 25 2500 12 30 3000 $61,470 40 4000 Year ear 1 12475 $255,613 18700
1 2 3 4 5 6 7 8
37 3750 3000 37 3750 39 3938 45 4500 5250 6000 6000
$76,838 $61,470 $76,838 $80,679 $92,205 $107,573 $122,940 $122,940
50 5000 4000 50 5000 52 5250 60 6000 7000 8000 8000
High $$$ Quantity $$$ $4,098 350 $7,172 $20,490 1500 $30,735 $22,539 1650 $33,809 $22,539 1650 $33,809 $26,637 1950 $39,956 $30,735 2250 $46,103 $30,735 22 2250 $46,103 $30,735 22 2250 $46,103 $30,735 22 2250 $46,103 $30,735 22 2250 $46,103 $51,225 37 3750 $76,838 $81,960 60 6000 $122,940 $383, 83,163 28100 $575 575,769
$102,450 $81,960 $102,450 $107,573 $122,940 $143,430 $163,920 $163,920
75 7500 6000 75 7500 78 7875 90 9000 10500 12000 12000
$153,675 $122,940 $153,675 $161,359 $184,410 $215,145 $245,880 $245,880
IV. Operations The day to day operations of Pogo Eyewear will be eased through the use of technology. We will receive daily updates on customer inquiries from the call center. Upon receipt Pogo’s management can respond as needed. Our website will handle the processing of customer transactions and we will receive placed orders each morning for the prior day. Orders will be processed and shipped immediately from our warehouse. Initially orders will be processed by William. Once sales volume increases we will hire part time employees to process outgoing orders and returns. Other operational tasks involve marketing including making appearances at events, public relations, trade shows, and distributing samples. These duties will be executed by William. Production Our frames will be manufactured by third parties in other countries – primarily China. Once we receive the finished frames we will send them out to our optician to have plastic lenses installed as necessary. After this process is complete we will package the products in our warehouse and prepare them for shipment. Location Our warehouse will be located in Walla Walla, WA. Because our business will be conducted almost exclusively online warehouse location is not important. There is an abundant supply of cheap space available locally. Legal Environment
$15. We will only be required to register with Washington State since we won’t have legal “Nexus” in other states. Because products will be shipped from our location in Washington primarily to locations out of state we expect minimal if any state tax liability. Personnel Pogo’s personnel requirements will be minimal to begin with. We will outsource call center functions which means that the only physical labor required will be to receive incoming inventory shipments, prepare orders for shipment, and actually shipping the orders. In addition we will need to process pr ocess returns. Initially these functions will be done by William. As demand increases part time help will be hired at a rate of approximately $10 per hour with no benefits. There is a large supply of available employees locally due to the fact that there are three colleges in Walla Walla and other job opportunities are scarce. In addition there are a significant number of seasonal employees in the agricultural industry who are always seeking employment. In the future we may bring the call center function in house which will require the hiring of numerous employees and managers all of which can be procured locally. In addition we will likely hire an operations manager to oversee processing of orders and shipments once demand increases. This will free up the owners to be able to focus full time on marketing, public relations, and other promotional responsibilities. An operations manager can be hired locally for approximately $15 per hour with no benefits. Inventory At Pogo Eyewear we will be selling a fashion product which means that trends
We plan to promote Pogo Eyewear as a great gift. As a result we expect inventory levels to increase during the holiday season from late October through year end. Suppliers Initially our products will be sourced exclusively from two different suppliers: Alpha Viana Inc. 10699 Hickson St. #23 El Monte, CA 91731 AA Optical Company 2101 Midway Rd. Suite 100 Carrollton, TX 75006 In the future we may establish relationships with alternate suppliers and/or develop frame designs in house and source frames directly from manufacturers overseas. Credit Policies Payments will be accepted using Paypal or credit/debit cards only.
V. Management and Organization Pogo Eyewear will be managed and operated primarily by Bill Kinzel. Mr. Kinzel has significant business as well as finance and accounting experience. In the past he has held the position of controller at a manufacturing operation in Yakima, WA with $60 million in annual sales and over 350 employees. Bill has experience and knowledge with all aspects of business operations and
VI. Start up Expenses and Capitalization
PoGo Eyewear Item Initial Initial Inventory Inventory Web Design Design Packag Packaging ing Rent Rent Marketing Marketing Services Services SEO Fees Video Production Production Misc Misc Legal Legal Fees Fees Legal Legal Fees Fees Pack Packag agin ing g Desi Design gn Show/Event Show/Event Supplies Supplies Equipm Equipment ent Tooling Tooling -- Packaging Packaging Logo Logo Desi Design gn Insu Insura ranc nce e Call Center Center Set Up Trad Tradem emar ark k Fees Fees Quic Quickb kboo ooks ks Workin Working g Capit Capital al Contin Contingen gencie cies s Total
Estimated Start up Costs $$$ Notes $75,000 $75,000 3,750 units at average average cost of $20 $10,000 $10,000 Design Design of our ecommer ecommerce ce websit website e $7,500 $7,500 3,750 3,750 units units at averag average e cost cost of $2 $7,000 $7,000 6 months months rent rent on wareho warehouse use space space $5,000 Design Design of online online advertisem advertisements, ents, etc. $5,000 Search Search Engine Engine Optimizat Optimization ion of our website website $5,000 Produce Produce Youtube Youtube and Videos Videos for website website $5,000 $5,000 State State regist registrat ration ion fees, fees, etc. etc. $5,000 $5,000 Writin Writing g consum consumer er produc productt warnin warnings gs $3,0 $3,000 00 N/A N/A $3,000 $3,000 Displays, Displays, tables tables for events events and shows $2,000 $2,000 Shelvi Shelving ng for wareho warehouse use $2,000 $2,000 Tooling Tooling dies needed to make our packages packages $1,5 $1,500 00 N/A N/A $1,2 $1,200 00 Insu Insura ranc nce e -- 1 year year $1,000 Set up 1-800 number for customer customer service service $1,0 $1,000 00 N/A N/A $500 $500 Soft Softwa ware re $10,00 $10,000 0 2 Months Months Operat Operating ing Expens Expenses es $13,97 $13,970 0 To cover cover cost cost overru overruns, ns, etc. etc. $163,670
$700,000. Assuming a 65% equity interest outside investors would yield approximately $410,000 on the transaction after fees which would result in a 150% return on investment.
IX. Appendix
PoGo Eyewear Gross Revenue COGS Gross Margin
1 $4,098 $2,459 $1,639
2 $20,490 $12,294 $8,196
3 $22,539 $13,523 $9,016
4 $22,539 $13,523 $9,016
5 $26,637 $15,982 $10,655
Year 1 6 7 $30,735 $30,735 $18,441 $18,441 $12,294 $12,294
8 $30,735 $18,441
9 $30,735 $18,441
10 $30,735 $18,441
11 $51,225 $30,735
12 $81,960 $49,176
$12,294
$12,294
$12,294
$20,490
$32,784
Total $383,163 $229,898 $153,265
SG&A Part-time Labor Operations Mgr. Rent Insurance Utilities Web Hosting SEO/Ad Design Samples Call Center Web Advertising Misc. Advertising Trans. Fees Travel Total SG&A
$0 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $102 $0
$0 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $512 $1,000
$0 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $563 $0
$0 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $563 $1,000
$0 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $666 $1,000
$600 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $768 $1,000
$600 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $768 $1,000
$600 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $768 $1,000
$900 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $768 $1,000
$900 $0 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $768 $1,000
$900 $2,800 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $1,281 $1,000
$1,600 $2,800 $500 $100 $100 $200 $500 $1,000 $400 $3,000 $300 $2,049 $1,000
$6,202
$7,612
$6,663
$7,663
$7,766
$8,468
$8,468
$8,468
$8,768
$8,768
$12,081
$13,549
Operating Income
-$4,563
$584
$2,352
$1,352
$2,889
$3,826
$3,826
$3,826
$3,526
$3,526
$8,409
$19,235
Provision for Taxes
-$1,597
$204
$823
$473
$1,011
$1,339
$1,339
$1,339
$1,234
$1,234
$2,943
$6,732
$17,075
Net Income
-$2,966
$379
$1,529
$879
$1,878
$2,487
$2,487
$2,487
$2,292
$2,292
$5,466
$12,503
$31,711
$6,100 $5,600 $6,000 $1,200 $1,200 $2,400 $6,000 $12,000 $4,800 $36,000 $3,600 $9,579 $10,000 $104,479 $48,786
PoGo Eyewear Year 2 1 Gross Revenue
COGS Gross Margin
2
3
4
5
6
7
8
9
10
11
12
$102,450 $61,470
$81,960 $49,176
$102,450 $61,470
$107,573 $64,544
$122,940 $73,764
$143,430 $86,058
$163,920 $98,352
$163,920 $98,352
$1 $163,920 $9 $98,352
$163,920 $98,352
$184,410 $110,646
$204,900 $122,940
$40,980
$32,784
$40,980
$43,029
$49,176
$57,372
$65,568
$65,568
$65,568
$65,568
$73,764
$81,960
Total $1,705,793 $1,023,476 $682,317
SG&A
Part-time Labor Operations Mgr. Officers Salary Rent Insurance Utilities Web Hosting SEO/Ad Design Samples Call Center Web Advertising Misc. Advertising Eyewear Design Trans. Fees Travel
$2,500 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $1,000 $2,049 $1,000
$2,500 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $2,561 $2,000
$2,500 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $1,000 $2,689 $1,000
$3,500 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $3,074 $2,000
Total SG&A
$18,061
$18,549
$19,061
$19,189
$20,574
$21,586
$22,098
$22,098
$22,098
$22,098
$23,110
$23,123
$251,645
Operating Income
$22,919
$14,235
$21,919
$23,840
$28,603
$35,786
$43,470
$43,470
$43,470
$43,470
$50,654
$58,838
$430,672
$8,022
$4,982
$7,672
$8,344
$10,011
$12,525
$15,215
$15,215
$14,897
$9,253
$14,247
$15,496
$18,592
$23,261
$28,256
$28,256
Provision for Taxes Net Income
$4,000 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $1,000 $3,586 $1,000
$4,000 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $4,098 $2,000
$4,000 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $1,000 $4,098 $1,000
$4,000 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $4,098 $2 $ 2,000
$15,215 $28,256
$4,000 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $1,000 $4,098 $1,000
$15,215 $28,256
$4,500 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $4,610 $2,000
$17,729 $32,925
$5,000 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $5,123 $1,000
$43,000 $33,600
$2,500 $2,800 $2,500 $500 $100 $100 $200 $1,000 $1,000 $500 $3,000 $300 $0 $2,561 $1,000
$20,593 $38,244
$30,000 $6,000 $1,200 $1,200 $2,400 $12,000 $12,000 $6,000 $36,000 $3,600 $5,000 $42,645 $17,000
$150,735 $279,937